The Opportunity Cost of Producing More of One Good on a Production

question 40

Multiple Choice

The opportunity cost of producing more of one good on a production possibilities frontier is

• A) a dollar amount.
• B) a ratio of quantities.
• C) a ratio of prices.
• D) equal to the area inside the production possibilities frontier.
• E) a theoretical concept which cannot be measured.

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Definitions:

Utility Function

Represents a consumer's preferences by assigning a utility value to each possible choice, indicating the level of satisfaction or happiness derived from those choices.

Edgeworth Box

A diagram used in microeconomics to show the efficient distribution of resources between two individuals or the allocation of two goods in an economy.

Pareto Optimal

In resource distribution, a framework where the betterment of one party directly causes a disadvantage to another party.

Initial Allocation

The initial distribution of resources, goods, or assets among various parties or agents in an economic model or real-world scenario.